The Swiss Parliament has adopted a new Federal Act providing that employee stock options will only be subject to tax on exercise, whereas restricted stock units will be taxable at grant (although at reduced levels to reflect the restrictions). The date on which the Act will come into force has not yet been announced, although this is currently being considered by the Swiss Federal Council.


The Netherlands Participation Exchange is to expand its online trading platform after receiving approval for this move from the Dutch Supervisor (AFM). This will allow for employees working in companies not registered on a listed stock exchange to trade their stock amongst themselves, altering the way that stock is more customarily traded in Dutch companies.  

Czech Republic

Changes to Czech social security and labour laws have been approved by the Czech Parliament to come into effect from 1 January 2011. Social security and health insurance rates will not be lowered as originally considered, but will remain at their current rates. However, the yearly assessment cap will be raised from CZK 1,707,048 in 2010 to CZK 1,781,280 for 2011.


Companies with Polish employees will need to consider the impact of new income tax regulations in force from 1 January 2011, governing the taxation of income from equity-based employee incentive awards. Under the new regulations, employees that receive shares from equity-based award plans that are issued by companies outside the EEA will no longer be eligible for exemptions from progressive tax rates and the deferral of tax rates until the time of sale of the shares. However, employers that offer employees treasury shares issued by companies within the EEA will now become eligible for the more favourable tax treatment.

UK and Hong Kong

With effect from April 2011, the double taxation agreement made between the United Kingdom and Hong Kong will alter the treatment of corporation, income and capital gains taxes for individuals from either of these countries that are assigned to work in the other party’s territory. Key points to note include the 0% rate of withholding on dividends (excluding Real Estate Investment Trusts) and a 0% withholding rate to apply to a resident of the other country living in the other party’s territory. The treaty also allows short term residents from either area to qualify for tax exemptions on satisfying certain conditions.


In January, the experts who are to be involved in the Exchequer’s study of a General Anti-Avoidance Rule (“GAAR”) have been announced, along with the respective areas they will cover. Key areas to be looked into by this study will include (i) how the GAAR will approach the issue of tax avoidance in the UK, (ii) the operation of similar anti‑avoidance rules and GAARs in other jurisdictions and (iii) how useful the operation of a GAAR would be.  


In a recent consultation paper, the FSA are considering whether to adopt measures to require authorised firms, banks and insurers to provide one month’s notice to the FSA, before issuing shares or any other equity awards that could be deemed regulatory capital. This obligation, if adopted, could in some cases extend to non-EEA group members who are issuing instruments of this nature.


New listing rules concerning corporate governance have been issued by the Irish Stock Exchange. The Irish Corporate Governance Annex requires listed companies to comply with the extra provisions contained in the Annex, along with the existing requirements under the UK Corporate Governance Code, or otherwise explain their failure for doing so. The new provisions focus predominantly on the composition and remuneration of the board and the work carried out by the audit committee.

South Africa

A ruling has confirmed the position on income tax for employees participating in share option and share appreciation rights plans of a holding company. The new ruling bases the calculation of an employee’s taxable income on a set formula and distinguishes employees resident in South Africa, who are taxed on their income made worldwide, from non-resident employees, who are subject only to tax on income earned within South Africa.  


The French Administrative Supreme Court has held that compensation received by an employee by way of an indemnity for giving up their right to exercise employee stock options must be taxed as employee income and not as capital gains. The decision of this case has important implications, as it will mean that the rules governing income tax and social contributions will now apply to individuals in receipt of these payments.  


New Russian tax rules have been adopted governing the taxation of stock options, with the likelihood that such provisions under the rules will extend to ESPPs. The new rules and their interaction with the existing Russian Tax Code result in some uncertainty over how the awards should be taxed. It would seem that the awards are now subject to double taxation at grant and exercise, resulting in less favourable tax treatment and meaning further clarification will need to be provided.